Cross-Border Bank Flows and Monetary Policy

  title={Cross-Border Bank Flows and Monetary Policy},
  author={Ricardo Cordeiro Correa and Teodora Paligorova and Horacio Sapriza and Andrei Zlate},
We analyze the impact of monetary policy on bilateral cross-border bank flows using the BIS Locational Banking Statistics between 1995 and 2014. We find that monetary policy in the source countries is an important determinant of cross-border bank flows. In addition, we find evidence in favor of a cross-border bank portfolio channel. As relatively tighter monetary conditions in source countries erode the net worth and collateral values of domestic borrowers, banks reallocate their claims toward… CONTINUE READING

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